Medicaid and Permanent Supportive Housing for Chronically Homeless Individuals: Emerging Practices From the Field. 5.4. How Are Services Linked to Housing?


In our case study sites, the agencies providing community-based mental health care (described in Section 5.3 of this chapter) to people who are chronically homeless with mental illness are involved with housing in several ways. The agencies themselves may offer the housing as well as the service component of PSH, they may partner with housing developers and providers so that together they offer the mix of housing and supports needed for PSH tenants, or they may provide mental health services to people residing in PSH without having formal, ongoing partnership arrangements with the agency offering the housing. Likewise, the state departments of mental health for these sites play various roles, which we describe here.

5.4.1. State Department of Mental Health Contributions to the Housing Component of PSH

In our case study sites, state departments with responsibilities for people with mental illness are involved in the housing component of PSH in several ways. They may pay the capital costs of developing the housing, cover part of the operating costs through rent subsidies, and/or develop partnerships with other public agencies to facilitate housing development and operations or to link services with tenant-based rent subsidies administered by public housing authorities. Most of the housing units that serve mental health agency clients who have experienced homelessness operate as PSH and include supportive services that help people retain their housing.

Creating the Housing

In some of our case study sites, state mental health agencies have been developing PSH for their clients, using funds under their control for the capital outlays. In the District of Columbia, the Department of Mental Health has partnered with the Department of Housing and Community Development to participate in the latter agency's semi-annual requests for proposals to develop affordable housing. The Department of Mental Health has assigned several million dollars to these requests, which are producing hundreds of PSH units mixed with other units in affordable housing developments.

In Los Angeles, the Los Angeles County Department of Mental Health has used funds made available through the state's Mental Health Services Act (MHSA) to help pay for more than 1,300 units of PSH for people experiencing homelessness who have a serious mental illness. The county's Mental Health Services Housing Trust Fund provides funding for services in PSH, and the county also assigns MHSA Housing Program funds to the California Housing Finance Agency, which administers those funds for capital and operating costs in affordable housing projects that include PSH units.68 All of the PSH tenants are linked to Department of Mental Health services, and most participate in Full Service Partnership or Field Capable Clinical Services.

One of our other case study sites, Connecticut, is not otherwise being discussed in this chapter because it does not use Medicaid to support the services component of PSH, but this is because the state has paid for a comprehensive PSH program since 1994 that uses state dollars to cover all three PSH cost components--capital, operating, and services. Capital funding comes through the state housing finance agency, while operating and service funding come through the Department of Mental Health and Addiction Services, with additional support from the federal Shelter + Care rental subsidy program. An important difference with the Connecticut PSH tied to early waves of the state program is that tenants do not have to be Department of Mental Health and Addiction Services clients or have SMI or SPMI--they just have to be homeless or at risk of homelessness.

Subsidizing Rents

The way that Connecticut's Department of Mental Health and Addiction Services covers rent subsidies and other operating costs under the state's PSH programs is described above. In the District of Columbia, the Department of Mental Health commits its own funds to subsidize housing for its clients and also negotiates with other agencies for rent subsidies, as described below.

Minnesota's Department of Human Services administers a state-funded program called Group Residential Housing, which provides an income supplement program to pay room and board costs for low-income adults who reside in designated types of settings. The program serves people with mental illness and also includes people with physical disabilities or substance use disorders. The funds can be used to subsidize rents or operating costs for PSH and for some other types of group housing. Some housing settings, including many site-based PSH programs, are registered Housing with Services programs, and these receive a supplemental service rate to cover the costs of supportive services. The program we have been studying in Louisiana, the state's post-Katrina Permanent Supportive Housing Program, also provides rent subsidies using special federal appropriations of Shelter + Care certificates and Housing Choice Vouchers that can be used only for program clients. In addition to these post-Katrina rent subsidies, the program is incorporating other rent subsidy opportunities as they arise.

Partnering to Expand Resources

The District of Columbia Department of Mental Health's collaboration with the Department of Housing and Community Development to create PSH was described earlier in this section. The Department of Mental Health also works with the DC Housing Authority to obtain rent subsidy resources for its clients, including an allocation of tenant-based Housing Choice Vouchers as well as local rent subsidies from the Local Rent Subsidy Program managed by the DC Housing Authority.

In Los Angeles, the County Department of Mental Health partners with the Housing Authority of the City of Los Angeles and the Housing Authority of the County of Los Angeles to use Housing Choice Vouchers that those agencies have set aside through limited preferences and made available to people experiencing homelessness who are clients of the County Department of Mental Health and its contract providers. To achieve the goal of reducing chronic homelessness in Los Angeles County, eligibility for most of these vouchers is now limited to persons experiencing chronic homelessness. The City of Los Angeles Housing Department created a program that funds both capital and operating costs for PSH development through a single application.

The collapse of the housing market and freeze on capital financing that started in about 2008 threatened continuing development of PSH funded through various public funding streams. City and county housing and mental health agencies have worked together to save several projects, applying funds from one or another agency as needed and available to keep construction or renovation going--even if some of the funds were originally allocated to operations--and committing to provide the operating funds once the projects were open and occupied.

5.4.2. Models of Housing-Service Connection at the Provider Level

This section describes the ways that Medicaid-reimbursable supportive services and housing come together to help people experiencing chronic homelessness obtain and keep housing and access the health and behavioral health services they need. We organize this section by type of housing-service arrangement, noting specific instances from our case study sites where the various alternatives for Medicaid payments are being used. We start with what is available for people who are still homeless, followed by arrangements available once people are in housing.

Outreach and Engagement

An activity most needed early on but least likely to come within the Medicaid purview is finding people; working to develop their trust; completing the procedures that will ultimately qualify them for housing, such as landlord and housing authority applications; and working with them to find, lease, and move into a housing unit.

At the time of the outreach staff's initial encounter, the people experiencing chronic homelessness are not enrolled in Medicaid. The process of helping them enroll can be long and arduous, involving as it did in most states during the years of our case studies first becoming an SSI beneficiary. Our sites covered the expense of conducting these activities in various ways, including through contracts with public agencies that use state or county general funds or other tax revenues, SAMHSA's Projects for Assistance in Transition from Homelessness (PATH) program, federal block grants or other federal grant programs, foundation grants, and agency direct fundraising. In Chicago, for example, Heartland Health Outreach's staff is supported by a PATH grant, and they perform a lot of the agency's outreach and engagement work with people experiencing homelessness, remaining with a client until the client qualifies for Medicaid. In past years, the Illinois Department of Mental Health provided flexible state funds that could cover the costs of outreach and engagement while mental health providers worked to help people establish eligibility for Medicaid, but these state funds had just been eliminated when our project began in 2010.

One Agency Provides Both Housing and Services

Sometimes the same agency offers both housing and the voluntary Medicaid-reimbursable services. For project-based PSH, that agency operates the housing directly and the operations staff are agency employees. With scattered-site PSH, the agency controls the rent subsidies (usually Shelter + Care or Housing Choice Vouchers) and works with many different private landlords to assure that its clients can obtain housing and remain stably housed.

Many mental health service providers in Los Angeles County, Chicago, Hennepin County, and elsewhere in the country have developed project-based PSH to serve their homeless clients, all of whom are people with serious or severe and persistent mental illness. In Chicago, most behavioral health agencies that provide PSH have begun requiring that new clients already be eligible for mental health services, which the agencies couple with housing placement to provide the complete PSH package. In Los Angeles, these clients do not need to be Medicaid beneficiaries to receive the services, thanks to California's Mental Health Services Act funding.

But providers of both housing and services increasingly are focused on serving people who are already Medicaid recipients. Minnesota's early eligibility expansion has made it much easier for people experiencing homelessness to qualify for Medicaid and hence for PSH from providers of this type.

Mental health providers may also have control over tenant-based rent subsidies that they use to help their clients who are already Medicaid recipients to find apartments in the community. The District of Columbia's Pathways to Housing program operates in this way, providing Medicaid-reimbursed Assertive Community Treatment services to chronically homeless clients of the Department of Mental Health and using Shelter + Care and other rent subsidies to move clients into housing. Under Louisiana's Permanent Supportive Housing Program as it operated before the Louisiana Behavioral Health Partnership (see Chapter 6), federal Community Development Block Grant funds were used to pay for the services of Housing Support Teams and Assertive Community Treatment, which helped the program's clients. All became Medicaid providers by 2013, after extensive training and organizational development to meet state Medicaid provider standards. In 2013, these providers began to receive Medicaid reimbursement for eligible services to homeless and formerly homeless clients living in PSH that are included in the state's 1915(i) state plan amendment.

Some PSH Service Providers Are Not Medicaid Providers--and Some People Experiencing Chronic Homelessness Are Not Eligible for the Medicaid Services Most Often Provided in PSH

Some of the PSH providers that have been most active in creating and delivering services in PSH for people experiencing chronic homelessness are not Medicaid service providers. Intending to serve the most vulnerable and chronically homeless people in their communities, many of these PSH providers have not limited eligibility for housing to persons who have a severe mental illness that would qualify them for Medicaid-covered community-based mental health services, which are the PSH services most often covered by Medicaid. As a result, a substantial number of their PSH tenants are probably not currently eligible to receive Medicaid-covered mental health services, although many of these tenants have substance use disorders, cognitive impairments, and histories of trauma that result in similar functional impairments, and they could benefit from individualized and flexible services that are similar to those that Medicaid covers as mental health benefits for persons with SMI.

A 2011 survey of Minnesota's PSH providers found that of 43 PSH providers responding, 32 receive no Medicaid reimbursement for any services for their residents. The remaining 11 agencies are Medicaid providers, but only two reported billing Medicaid for home and community-based services; seven for MH-targeted case management; and eight for Adult Rehabilitative Mental Health Services. Some receive reimbursement for more than one type of care. Only about one in four of the PSH providers responding to the survey in Minnesota seek Medicaid reimbursement directly, and many PSH providers reported that they did not contract or otherwise partner with agencies that are certified to provide Medicaid-reimbursable services.

For people experiencing long-term homelessness, and particularly for those who do not have a serious mental illness but may have other disabling health conditions and/or substance use disorders, many of the services that are critical to helping people get and keep housing are not being paid for through Medicaid. Instead, PSH service providers have relied on other sources of funding, including local resources and time-limited grants, making it difficult to sustain or expand services at the scale needed to provide PSH for more people who are experiencing chronic homelessness. Some types of services are particularly difficult to finance with Medicaid reimbursement. In their responses to the Minnesota survey, nearly all providers indicated that they were not receiving Medicaid reimbursement for outreach, engagement, harm reduction services, housing supports, and psychotropic medications management.

It should be noted that this survey of PSH providers was done before the state's early expansion of Medicaid eligibility was fully implemented (enrollment began on March 1, 2011). So the situation with regard to Medicaid enrollment of PSH tenants is likely to have changed significantly since the survey was completed. Eligibility for certain mental health and supportive services would not have changed as much, however, since that would still depend on meeting medical necessity criteria, and the agencies themselves would still have had to become Medicaid providers or to partner with agencies that are certified to deliver the relevant services.

Housing and Service Providers in Partnership

This is a common form of PSH, with many examples in all of our case study sites. Many of these arrangements involve agencies on the service side that are not Medicaid providers, but some examples of partnerships involve a service partner with some capacity to use Medicaid financing:

  • In Chicago, Heartland Health Outreach (a Health Center) collaborates with Mercy Housing Lakefront to provide on-site health clinics in PSH and also links tenants seen in those housing-based clinics to Heartland Health Outreach's main clinic for ongoing care and treatment. These services are Medicaid-reimbursable if clients are enrolled in Medicaid.

  • In Los Angeles, A Community of Friends (a housing provider) has arrangements with various providers of Medicaid-reimbursable and county-funded mental health services for supports to tenants in its many buildings.

Also in Los Angeles, Skid Row Housing Trust has arrangements with JWCH's Center for Community Health and Los Angeles Christian Health Center (both Health Centers) as well as Exodus Recovery and LAMP (mental health providers), among others, to serve its tenants.

Tenants Obtain Services Independent of their Housing Provider

In the model of care in which tenants obtain services on their own, the supportive housing provider may only accept tenants who are already connected to services and thus come with their own service provider. Others may offer housing to eligible applicants who do not have established connections to services and work with them to get them connected to whatever services they qualify for.

One agency in Los Angeles County exemplifies the former approach. It operates two site-based PSH developments and scattered-site PSH using vouchers. All tenants "are clients of something," the program administrator explained, whether they receive services from the organization that operates the PSH or another mental health service provider in the area.69 The agency will not accept a tenant into its housing unless the person already has access to mental health services. That said, the services in question are voluntary; they are usually either Full Service Partnership or Field Capable Clinical Services, which operate on the premise that clients may refuse to participate in particular services at particular times.

To have access to the PSH units that the Los Angeles County Department of Mental Health helped create with Mental Health Services Act funding, including both site-based PSH and scattered-site PSH implemented through partnerships with local housing authorities, a person experiencing chronic homelessness must first be enrolled in a service program that can access Medicaid reimbursement and/or funding from other revenues administered by the county. The department helps people who are chronically homeless get connected to services in the county's mental health system first, which in turn provides the support needed to help people get and keep housing, submit successful applications for SSI, and achieve other goals.

The Department of Mental Health uses this approach because it does not provide funding that is specifically designated for services to PSH tenants, but instead creates PSH by connecting the services funded through its existing programs and contracts to either site-based housing units or vouchers for use in scattered-site units. Many of these service programs, particularly those funded through the Mental Health Services Act, have incorporated low-demand, housing-first strategies and do not require that people experiencing homelessness comply with strict program rules or achieve sobriety before they can get housed. The agency's approach, however, generally requires that people experiencing chronic homelessness establish some connection to mental health services before they are offered housing assistance through the resources controlled by the Department of Mental Health.

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